ZTE case highlights need to remain calm in handling international legal crises

By Hu Weijia Source:Global Times Published: 2017/3/9 0:43:39

Chinese telecom equipment giant ZTE Corp attracted widespread attention Tuesday evening when it agreed to pay a penalty of $892 million in a US sanctions case. It's appropriate for ZTE to seek reconciliation rather than confrontation with Washington. The US is still in a pivotal position in the global economy, thus China's multinationals must be capable of getting along with the US government.

ZTE's share prices reportedly climbed 7.4 percent in early Hong Kong trade Wednesday after the company said that it had settled with US authorities over export controls. US authorities last year placed ZTE on an entity list over allegations that the company shipped US-made components to Iran, making it difficult for ZTE to acquire US-made chips and software and threatening the security of the whole supply chain of ZTE. The company has showed significant calmness and restraint in dealing with the crisis and ultimately reached a deal in the case, despite there have been voices online that ZTE or even the Chinese government needs to hammer out a tit-for-tat countermeasure.

It is understandable that ZTE could not risk US withdrawal. The company is reported to have established 14 offices and six research centers so far in the US, which is the world's leader in scientific and technological innovation. Additionally, ZTE's business in the US increased roughly 20 times from 2010 to 2015. The company would probably suffer far more if it lost the US market.

Friction with Washington is inevitable as China increases its presence in the global community. What's more, there are always ups and downs in the Sino-US relations, which would probably have an impact on bilateral economic ties. Similar cases may happen again and the question remaining is how Chinese enterprises can minimize their risks and losses.

China is now witnessing a boom in outbound direct investment. Chinese enterprises should not walk backwards and abandon efforts to explore oversea markets. The US has taken action against many foreign firms in the past and ZTE performed relatively well in dealing with the crisis. People need to be psychological prepared that bilateral economic relations cannot be guaranteed to operate smoothly. Chinese enterprises need to actively seek solutions to problems in legal settlements, while avoiding nationalist sentiment.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn


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